Following the investor meetings last week hosted by Nutanix Inc (NASDAQ: NTNX) at the Piper Jaffray Tech Select conference in Dana Point, California, Piper Jaffray said the management indicated increasing traction the company is gaining within the Global 2000 companies.

As such, the firm reiterated its Overweight rating on the shares of Nutanix and its $28 price target.

At the time of writing, shares of Nutanix were down 2.64 percent at $21.37.

Penetration Rate On The Rise

Analyst Andrew Nowinski noted that Nutanix had a 28-percent penetration rate within the Global 2000 companies at the end of 2017, up from 17.7 percent at the end of 2016. Despite the lumpy nature of such deals, the analyst said the Global 2000 customer count has increased at a CAGR of 73 percent from fiscal year 2014 to 2017.

Options For Software Growth

On software optionality, Piper Jaffray noted that at the investor meetings, the management focused on the growth of the software business and the various options before the company to accelerate software revenue growth.

Assuming the company had stopped selling appliances in 2017 and consequently removing revenues from the appliances, the management said 75–80 percent of the total revenues for the year would have been software/services. If the same percentage was applied to 2016, the firm said software/services revenue growth would have been 68 percent year over year.

Piper Jaffray noted that this was exactly what the actual growth was, including hardware.

The firm also said the company is contemplating changing its sales compensation plans, providing a higher incentive/commission for software-only sales. However, the management said the changes would not be implemented unless gross profit dollar is higher under the new plan.

Static Competitive Landscape

Additionally, the company indicated that there is no change in the competitive landscape, the firm added. The company still sees EMC in most bake-offs, Cisco Systems, Inc. (NASDAQ: CSCO)'s HyperFlex in some deals and HP Inc (NYSE: HPQ)/Simplivity mostly on lower-end deals./p>

"We continue to believe the company has the most comprehensive hyper-converged platform in the market, which should drive further penetration into the G2000," the firm said.